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REF'" ID ·:.A.6.1~ 2 • - ,.,.Xn r-rr-nr= -- . ~--- - r Q 01 OLCI \L !). .~. • ~ ~ • -" ---~EO 3~3(n7(2} · - ,, Pt.B6-36i5'0.usc 36os - ' . ________,.__.-i- . .. --- ----· ;r =· -- .',:4.-:.~ ~ bo ~ -4~ x,2.;\ .':. ------..... -~ e4.d~1't9 ·. --~------- . , ..f.Y~JS"""~~!....:!~--=~11!!:~~'""6'5.~~..._J~l2::~!-.~,,..;.,,,,,,,.,,.,., """'-r 1 <~ --~ ~-~~--;-~--.i..6~~L..~!::M~~::!f__..~~!:l!!!~...... iu..... ~~ced!~Sdlli!t..~~~-_...__. .... ~,..; .;- .. _. __ :-::· ....r _--:_ ..... ~-. ·- .. .tt ~ ":. _.fri:~ ~-!:...- ._.y ... • ..:""'2- ,;..__ ....... .. •• .. • -I ..........."-' ~ - .... -~ - * "'·- REF~ 'in: Afoi~~62-2- • [0P-SE-~rkll_ ~~i6~~~~~~usc 36os -· -- ,,. • •_f:_ :""~- ~- -(I'" •••..! --- ~-- - -. 1 • . "-... - .. _.- . .... - ..,.. ·.... · ·- ....\ -. .. ~.I --· ............ 'I'.' ..- it" .. -. ~ .. ~-~· ... ··-~ ••- !ii .• ;;,.- ~ .· -~..._ 'le.... :. - -... -:.:.··- : _-.:;,. ... ~ - .," -:;, .... .:.:-· .-,_. .. ·' .. _.-. 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The coming of the cold war Etfte-tfteni. the break-up of the colonial empires and resultant formation of dozens of new nations I• 'el:r- created a new market for cipher machines. The re-establishment of Ak.tiebolaget Cryptoteknik in Stockholm after the war proved to be somewhat temporary. In 1948 Hagelin moved his development work to Zug, Switzerland because of a\Swedish law which allowed the government to appropriate inventions \it needed for national defense. In 1959, Hagelin moved the entire firm to Zug where he incorporated it as Crypto Aktiengesellschaft (i!llS\ Crypto A.G.). Meanwhile, Hagelin had been improving the M-209 and wa$ also producing new cipher machines for commercial, military, and diplomatic use. He filed patent applications for some of his new machine.s in the United States, Switzerland, France and Italy. Through an informal contact (probably Friedman), the Armed Forces Security Agency was \ not only aware of Hagelin's new systemSbut were somewhat concerned lest Hagelin's newer, more secure machines ~ cause some previously readable sources to disappear. I and the matter was presented to the Armed Forces Security Agency Council. ~~----------........... EQ 3.3(h)(2) PL86-36/50 USC 3605 .. 0COP SEGRE) APSA, AFSAC, and ,____~~~~~~~~~~~~~~~~~~~~~~--' the C.l'A are too lengthy to discuss at this time. Neither this the possible merger of Hagelin's firm with that of Siemens,another well known manufacturer of cipher machines • .. _...... that he continued to receive government contracts for cipher machines. REF ID:A61622 In 1916 Arvid Gerhard Damm and Commander Captain Olof Glydin of the Swedish Royal Navy founded Aktiebolaget Cryptograph, a company designed to make commercial cipher machines. Among the investors in the firm were Emanuel Nobel, the nephew of the famous Alfred NobelJand K. W. Hagelin,who managed the Nobel brothers' oil company in Russia and at one time was the Swedish Consul-General in St. Petersburg. In 1922 Hagelin's son, Boris Ceasar Wilhelm,joined Aktiebolaget Cryptograph. Although he had been born in Russia,he had graduated from the Royal Institute of Technology in Stockholm in 1914 with a degree in mechanical engineering. He had worked for six years for ASEA, Sweden's version of General Electric, and had spent one year in the United States working for Standard Oil of New Jersey. In 1925 Hagelin discovered that the Swedish military was planning to purchase an Engima cipher machine. By modifying one of Damm's cipher machines, he made it more suitable for field use than the Enigma and offered it as the B-21 to the Swedish Army. It was accepted and a larger order for the cipher machine was placed in 1926. In 1927 A. G. Damm died and the Hagelin interests bought the firm and reorganized it as Aktiebolaget Cryptoteknik. Boris Hagelin managed the company. Hagelin began producing printing cipher machines ~ which were faster, more accurate, and more economical in terms of »# manpower than indicating mechanism like the Enigma. (1) REF ID:A61622 The turning point for the fortunes of the Aktiebolaget Cryptoteknik came in 1934. The French General Staff requested that the firm produce~pocket-sized cipher machine which could print cipher text; thus making it a one man operation. The result was the C-36 cipher machine. In 1935 the French ordered 5,000 of the machines which put the company on a solid footing and laid the groundwork for future successes. According to David KQ,lln, Hagelin began corresponding with American cryptologic experts in 1936 in reference to the C-36 cipher machine. He visited the U.S. in 1937 and in 1939. Evidently Hagelin first met William F. Friedman on these visits. A friendship between the two developed during this period which lasted until 4..,~i Friedman's ~t in 1969. In 1940 Hagelin and his wife managed to +~o escape Europe with blueprints and ')If C-36 machines. Later Hagelin was able to smuggle 50 more machines into the u.s. By that time the u.s. had tested his C-36, with some improvements suggested by Friedman, and decided to accept it as it~ medium-level cryptographic system. It was designated the M-209 and it saw service in military units from division to battalion level. In 1942 Smith and Corona Typewriters, Inc~ began producing 400 of these machines a day in its Groton, New York factory. More than 140,000 were produced and Hagelin royalties ran into the millions. "He became the first and the only man to become a millionaire from cryptology." (2) .. - REF ID:A61622 OCOP 3ECRE1 · In 1944 Ha~elin returned to Sweden. Hagelin thought that as the war ended the cipher machine business was finished but events proved him wrong. The coming of the cold war as well as the break-up of the colonial empires and resultant formation of dozens of new nations created a new market for cipher machines. The re-establishment of Aktiebolaget Cryptoteknik in Stockholm after the war proved to be somewhat temporary. In 1948 Hagelin moved his development work to Zug, Switzerland because of a Swedish law which allowed the government to appropriate inventions it needed for national defense. In 1959, Hagelin moved the entire firm to Zug where he incorporated it as Crypto Aktiengesellschaft (Crypto A.G.). Meanwhile, Hagelin had been improving the M-209 and was also producing new cipher machines for commercial, military, and diplomatic use. He filed patent applications for some of his new machines in the United States, Switzerland, France and Italy. Through an informal contact (probably Friedman), the Armed Forces Security Agency was not only aware of Hagelin's new systems but were somewhat concerned lest Hagelin's newer, more secure m~-...·~.-....-.a.u.t.J~........:~...... ~.-.;L..1111.:~-.....z....~~~~~~--. readable sources to disa ear. and the matter was presented to the Armed Forces Security gency Council. and t e possi e merger o Hage in s irm wit known manufacturer of cipher machines. ............ ···· .. ···· that he continued to receive government contra.cts for cipher machines. EO 3.3(h)(2) PL 86-36/50 USC 3605 ...-. fl"'~ """ ••• ~ REF ID:A61622 • In 1916 Arvid Gerhard Damm and Commander Captain Olof Glydin of the Swedish Royal Navy founded Aktiebolaget Cryptograph, a company designed to make commercial cipher machines. Among the investors in the firm were Emanuel Nobel, the nephew of the famous Alfred Nobel, and K. w. Hagelin, who managed the Nobel brothers' oil company in Russia and at one time was the Swedish Consul-General in St. Petersburg. In 1922 Hagelin's son, Boris Ceasar Wilhelm, joined Aktiebolaget Cryptograph. Although he had been born in Russia, he had graduated from the Royal Institute of Technology in Stockholm in 1914 with a degree in mechanical engineering. He had worked for six years for ASEA, Sweden's version of General Electric, and had spent one year in the United States working for Standard Oil of New Jersey. In 1925 Hagelin discovered that the Swedish
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